Legal Definition of Free on Board: The term, or its abbreviation f.o.b., is used in a quotation or in a contract between a seller and a buyer of goods to be delivered. The term, which is usually followed by a defined location—often either the sellerÆs or the buyerÆs place of business, means that the seller is responsible for delivering the goods to that defined location and assuming the risk of loss until then | Increase Business Efficiency and Protect Your Bottom Line – Learn the Legal Definition of F.O.B. for Delivery Contracts. Understand Your Responsibilities and Liabilities to Prevent Losses. Negotiate Smartly!.